Bessent Says the K-Shaped Economy Is Over. The Data He Cited Doesn't Fully Back That Up.

Treasury Secretary Scott Bessent went on CNBC's Squawk Box this week and said he's done listening to people talk about the K-shaped economy.

"I got sick of hearing about this K-shaped economy," Bessent said. "I can say here, definitively, the K-shaped economy is over."

He's got a new label for it: the C-shaped economy. The idea is that instead of the rich pulling away while everyone else falls behind, the two groups are starting to converge toward the middle.

Bessent isn't pulling this out of thin air. He cited a 5.5% year-over-year wage gain for the lowest quartile of full-time workers, according to Business Insider, which checked that figure against Bureau of Labor Statistics data tracking full-time wage and salary workers. Higher-paid full-time workers, by that same measure, saw much slower growth. That's a real number and it points the right direction.

He also credited the One Big Beautiful Bill Act, which killed federal taxes on tips and overtime and cut taxes on Social Security benefits for seniors. The White House says the bill delivers an average 15% tax cut for people earning between $15,000 and $80,000, plus roughly $1,500 more a year in take-home pay for tipped and overtime workers, and up to $10,900 more for a typical two-child family after taxes.

That's a genuinely pro-worker piece of policy. Cutting taxes on tips and overtime puts money directly into the pockets of people who bartend, wait tables, or work extra shifts. It's a straightforward benefit for people who aren't Wall Street types.

Bessent's own number only tells part of the story.

Business Insider found that once you widen the lens to include hourly and part-time workers, not just full-time salaried employees, the picture flips. Data from the Federal Reserve Bank of Atlanta, which does include those workers, shows the lowest earners have actually seen the smallest wage gains since late 2024. That's a big chunk of the workforce Bessent's favorite stat leaves out.

Moody's chief economist Mark Zandi told outlets that spending by the bottom 80% of earners is flat once you adjust for inflation, while spending by the top earners is up nearly 4% in real terms, according to BigGo Finance. The gap is holding steady or widening on the spending side, even if wages for some workers are catching up.

Goldman Sachs and Morgan Stanley have also flagged that higher gas prices tied to the Iran conflict ate into the benefit of the tax cuts for lower-income households, per BigGo Finance's reporting. Rent, which Bessent pointed to as an example of cooling inflation, is still rising for both renters and homeowners even as the pace of increases slows, Business Insider reported. Slower inflation on rent isn't the same as rent actually getting cheaper.

There's a real, defensible case buried in Bessent's argument. Wage growth for low-income full-time workers accelerating faster than wage growth for high earners is worth celebrating, and it's backed by actual BLS data, not spin. Elizabeth Pancotti of the left-leaning Groundwork Collaborative, who is skeptical of Bessent's broader framing, still didn't dispute that wage figure. She disputed whether it adds up to the gap actually closing.

"C-shaped would suggest that maybe we're seeing some compression in inequality—that as the high end does a little bit worse and the low end does a little bit better, we start to meet more in the middle," Pancotti told Business Insider. "I don't think we've seen any evidence to suggest that we're closing the gap on those things."

Bank of America's chief U.S. economist, Aditya Bhave, found something closer to a middle ground: consumer spending excluding gasoline stopped showing a clear K-shaped pattern on a year-over-year basis over the most recent two-week stretch he examined, according to BigGo Finance. That's a real signal of narrowing, even if it's a short window.

An Atlanta Fed study covering 2021 through its most recent 2025 data still found the K-shape showing up clearly in consumer spending overall, Business Insider reported. Company earnings calls are still referencing the K-shaped dynamic too, just less often than earlier this year. Mentions of Bessent's new "C-shape" term have shown up only eight times across earnings calls in the past two years.

None of this means Bessent is lying. The wage data for low-income full-time workers is real, and the tax relief from the OBBBA is real money in real paychecks. But calling the entire K-shaped divide "over" is a bigger claim than the underlying data supports right now, and outlets that ran the "K-shape is over" headline without the Atlanta Fed and Moody's pushback left out the parts of the story that complicate it most.

Whether the gap is actually closing, or just softening at the edges while the underlying spending divide holds firm, will come down to whether the next few Atlanta Fed and BLS reports confirm Bhave's two-week snapshot or contradict it.